Joinery Plus Ltd (In Administration) v Laing Ltd

An adjudicator’s decision is valid and enforceable if the adjudicator answers the question referred, even if the answer is wrong. It is a nullity where the adjudicator asks and answers a materially different question, including by applying the wrong contractual conditions and documentation. The court must interpret the decision fairly, naturally and sensibly in its contractual and procedural context, allowing for the speed of adjudication. A drafting slip may be corrected within the limited correction jurisdiction, but a fundamental jurisdictional error cannot be cured by asking whether the same result would otherwise have followed. A cheque may be accepted without affirming an adjudication decision where acceptance is clearly qualified.

Joinery referred a substantial delay and disruption claim arising from its Stakis London Metropole Hotel subcontract to adjudication. The subcontract incorporated amended BEF DOM/2 conditions, but the adjudicator’s decision repeatedly referred to and applied the JCT Works Contract conditions used for a different project. Laing paid the sum awarded. Joinery stated that it accepted the payment only on account and challenged the validity of the decision.

The issues were whether the adjudicator’s decision was wholly or partly a nullity, whether Joinery had affirmed it by banking the cheque, whether a fresh adjudication was permissible, and whether repayment could be imposed as a condition of further proceedings or relief.

1. Nullity. The adjudicator’s decision dated 6 August 2001 was wholly a nullity and made without jurisdiction. The referred dispute concerned the amended DOM/2 subcontract, but the decision and reasons proceeded by reference to the JCT Works Contract, including provisions governing reasons, interest and costs which did not apply.
2. The governing distinction is between answering the referred question wrongly and answering a different question. The former is an error within jurisdiction. The latter is a jurisdictional error. The court must give the decision and reasons a fair, natural and sensible interpretation, bearing in mind the speed and informality of adjudication.
3. The errors were not accidental slips within the adjudicator’s limited power of correction. The court could not determine whether the same result would have followed had the correct contract been applied. Once the adjudicator had exceeded jurisdiction, the decision was a nullity irrespective of the possible result on a proper reference.
4. The adjudicator’s post-decision letter could be considered only to the limited extent that it shed light on the nature and materiality of the original errors. It could not revise or defend the decision, since the adjudicator was functus officio subject only to the limited correction power.
5. Joinery had not affirmed or approbated the decision. Acceptance and banking of the cheque did not by themselves establish settlement. Objectively, Joinery’s immediate written reservation, express challenge to validity and invitation to rerun the adjudication showed qualified acceptance on account.
6. Joinery could commence a fresh adjudication. Paragraph 9(2) of the statutory Scheme did not apply because no decision had been taken on the referred dispute. Leave under section 11(3)(d) of the Insolvency Act 1986 was refused, since repayment would impede the administration and prejudice other creditors.

Declarations were granted that the decision was a nullity, that Joinery could serve a fresh notice of adjudication, and that banking the cheque had not affirmed the decision.